Germany has drafted a plan to end the country's tax exemption for crypto

Germany has drafted comprehensive legislation to eliminate its long-standing 1-year holding-period tax exemption for cryptocurrencies, marking a significant policy reversal in one of Europe's most crypto-friendly jurisdictions. According to multiple sources, the reform would take effect in 2027, with tax deductions potentially commencing in 2028. The finance ministry's proposal includes a 25% flat tax on crypto assets acquired after 2026, while grandfathering existing holdings to minimize disruption for current investors. Under this framework, current holdings would remain tax-free after the one-year holding period, but new acquisitions would face immediate taxation upon sale regardless of holding duration.

The legislative pathway faced substantial headwinds in September 2026 when Germany's Finance Committee voted down a Green Party (Bündnis 90/Die Grünen) proposal designed to accelerate elimination of the exemption. The Greens argued the existing rule was designed for physical assets like antiques and rare goods, not digital currencies, and cited Frankfurt School Blockchain Center research projecting €11.4 billion in annual additional tax revenue. However, the committee's four major factions opposed the measure on distinct grounds: the CDU/CSU objected on fairness grounds, contending that crypto taxation under the Greens' framework would create new inconsistencies relative to comparable assets like precious metals and foreign currencies; the AfD rejected expansion of the tax base on fiscal philosophy, arguing Germany should narrow taxation to core state functions; and the SPD declined to advance specific legislation, instead deferring to Finance Minister Lars Klingbeil's forthcoming formal proposals. Only Die Linke supported the Greens, though it flagged administrative complexity and gaps in loss-offset provisions that could undermine fiscal gains.

The reform reflects Germany's broader recalibration of crypto policy as the European Union tightens oversight under MiCA (Markets in Crypto-Assets Regulation). Reclassifying cryptocurrencies from "private assets" to taxable income would align them with standard capital gains treatment, eliminating a cornerstone advantage that has sustained Germany's crypto-friendly reputation. The transition design—grandfathering existing positions while taxing new acquisitions—balances fiscal objectives with political acceptability, though the September committee rejection indicates material uncertainty around final implementation timelines and structure.